Dolado, Juan JoséOrtigueira Silva, SalvadorStucchi, Rodolfo Mario2023-11-152023-11-152016-01-01Dolado, J. J., Ortigueira, S., & Stucchi, R. (2016). Does dual employment protection affect TFP? Evidence from Spanish manufacturing firms. SERIEs, 7 (4), pp. 421-459.1869-4187https://hdl.handle.net/10016/38875This paper analyzes how changes in the firing-costs gap between permanent and temporary workers affect firms¿ TFP in a dual labour market. We argue that, under plausible conditions, firms¿ temp-to-perm conversion rates go down when this gap increases. Temporary workers respond to lower conversion rates by exerting less effort, while firms react by providing less paid-for training. Both channels lead to a decline in TFP. We test these implications in a large panel of Spanish manufacturing firms from 1991 to 2005, looking at the effects of three labour market reforms which entailed substantial changes in the firing-costs gap. Our empirical findings provide some support for the above-mentioned mechanism. © 2016, The Author(s).eng© The Author(s) 2016.Atribución 3.0 EspañaFirms’ TFPWorkers’ effortTrainingTemporary contractsFiring costsresearch articleC14C52D24J24J41Economíahttps://doi.org/10.1007/s13209-016-0150-9open access4214459Series-Journal of the Spanish Economic Association7AR/0000030217